A first-quarter sales beat sparked a 5% increase in the share price Thursday, giving the luxury powerhouse a 29% rally for the year. That, along with a gain in the euro against the dollar, lifted LVMH’s market capitalisation to $486 billion, briefly ranking it as the world’s 10th-biggest company. Should it reach $500 billion, it would become the first European company to achieve that milestone.
“This illustrates the rise of wealthy people across the world, of a polarized society,” said Gilles Guibout, head of European equity strategies at AXA Investment Managers. “The luxury sector is therefore experiencing strong growth.”
For a growing crowd of investors, LVMH and its French luxury rivals are to the European stock market what Big Tech has been to the US: Dominant businesses whose growth holds up even as the economy waxes and wanes. Shares of LVMH and Hermes International have on average returned more than 20% annually the past decade and Kering has returned 16%.